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IN THE HIGH COURT OF DELHI
Navin Chawla, J.
Srinagar Banihal Expressway Ltd. - Appellant
Versus
National Highways Authority of India - Respondent
W.P.(C) 4034 of 2021
Decided On : 26-03-2021
The court ruled that under the Concession Agreement, the authority can execute third-party contracts without issuing a termination notice, thus denying the request for an injunction.
Headnote:(A) Concession Agreement - Article 37.1.3 - Notice intent to terminate the Concession Agreement - The respondent issued a notice for remedying defaults under the Concession Agreement; petitioner claimed inability to execute a MoU due to lender disputes. Respondent executed an agreement with another party for completion of work. (Paras 4, 10, 11)
(B) Injunction - Petitioner's request for an ad interim injunction denied due to existing agreements and failure to show credible evidence of funds. The court ruled that execution of a third-party agreement without a termination notice was permissible based on the existing agreement provisions. (Paras 12)
Facts of the case:
The petitioner sought to complete balance work of a contract with the respondent after issuing a notice for defaults. Following failed negotiations, the respondent executed a new contract with a third party to complete the project.
Findings of Court:
The execution of the respondent's agreement with a third party was valid, as there was no evidence of lender objection, and the petitioner failed to prove the need for an injunction.
Issues: The central issues were whether a notice of termination was required before the respondent could award the work to another party and whether the petitioner could obtain an injunction to stop the execution of this contract.
Ratio Decidendi: The court found that the provisions of the Concession Agreement allowed the respondent to contract with a third party without a pre-termination notice. As such, the petitioner's claim for an interim injunction was dismissed.
Result: Petitioner's request for an injunction denied.
| Table of Content |
|---|
| 1. contractual obligations and defaults under the concession agreement. (Para 4 , 5 , 6) |
| 2. delays and lender cooperation affecting project execution. (Para 7 , 9 , 10) |
| 3. requirements for third-party contract execution under the concession agreement. (Para 8 , 11) |
| 4. denial of interim injunction based on existing agreements. (Para 12 , 13) |
JUDGMENT
Navin Chawla, J. (Oral)
CM No.12197/2021 (Exemption)
Allowed, subject to all just exceptions.
WP(C) 4034/2021 & CM 12196/2021
1. Issue notice.
2. Notice is accepted by Ms.Gunjan Singh, Advocate on behalf of the respondent no. 1 and Mr.Kapil Arora, Advocate on behalf of the respondent no. 2.
3. Let counter affidavit be filed within a period of four weeks. Rejoinder, if any, be filed within a period of three weeks thereafter.
4. It is an admitted case of the petitioner that the Notice Inviting Tender for the balance work of petitioner's contract was issued by the respondent no.1 on 14.07.2020. Prior thereto, the respondent no.1 had issued a notice dated 22.05.2020 to the petitioner informing it as under:
"Accordingly, Concessionaire is hereby called upon for remedying the aforesaid defaults no later than the period as specified in the Concession Agreement, from the date of receipt of this notice, failing which the Authority shall be constrained to exercise its rights under the relevant clauses of the Concession Agreement and including issuing the separate tender on standalone basis for completing the balance work of Rs 142 Cr. Overriding powers of the Authority under Clause 17.10.1 states that if in the reasonable opinion of the Authority, the Concessionaire is in material breach of its obligations under this Agreement and in particular, the Maintenance Requirements, and such breach is causing or likely to cause material hardship or danger to the Users, the Authority may without prejudice to any of its rights under this Agreement including Termination thereof, by notice require the Concessionaire to take reasonable measures immediately for rectify."
5. The petitioner and the respondent have been corresponding thereafter on the plea of the petitioner that the petitioner be allowed to complete the balance work at the rates offered by the respondent no.2. Initially, the respondent no.1 was agreeable to the said offer and called upon the petitioner to sign the necessary MoU/Tripartite Agreement with including its lenders. It is not denied by the petitioner that such MoU/Tripartite Agreement could not be executed by it due to disputes between the petitioner and the lenders. It has also come on record that the lenders have moved the learned Debts Recovery Tribunal and the learned National Company Law Tribunal for recovering the amounts due to them from the petitioner.
6. By the letter dated 04.02.2021, the respondent no.1 called upon the petitioner to inter alia show credible evidence of availability of required funds for completion of the balance work. It is the say of the respondent no.1 that in spite of the opportunity granted, the petitioner was unable to do the same. In this regard, the respondent no.1 is also relying upon the letter dated 01.03.2021 of the Independent Engineer.
7. The learned counsel for the respondent no.1 submits that the project was in fact to be completed within 90 days of 02.04.2018, and has already been considerably delayed, leaving respondent no.1 with no option but to execute the agreement with the respondent no.2 for completion of the balance work. In fact, the agreement with the respondent no.2 has already been executed on 23.03.2021.
8. The learned senior counsel for the petitioner has placed reliance on Article 37.1.3 of the Concession Agreement to submit that for awarding the balance work to a third party, the respondent no.1 was to first issue a notice intending to terminate the Concession Agreement and seek the view of the lenders for entering into such contract with the third party. He submits that in the present case, ther
